You Want the Right, but Not the Obligation, to Sell

question 71

Multiple Choice

You want the right, but not the obligation, to sell 300 shares of ZZ Industries stock at a price of $30.00 per share and an option cost of $1. How much will it cost you to establish this option position?

• A)$300
• B)$320
• C)$360
• D)$378
• E)$382

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Definitions:

Members' Voluntary Winding Up

is a process initiated by the shareholders of a solvent company to voluntarily dissolve the entity and distribute its assets.

Insolvent Company

A company that cannot pay its debts as they come due or has liabilities exceeding its assets.

External Auditor

A professional firm or individual outside of an organization hired to examine its financial records and attest to the accuracy of its financial statements.

External Administration

External administration pertains to a process where an external person or entity is appointed to investigate, manage, and potentially restructure a financially distressed company's affairs to recover debts.